The uncertain nature of the inflationary environment has led clients to invest in cost saving projects, Ashwin Yardi, chief executive of Capgemini India, told ET.
Historically, there have been spikes in outsourcing demand during such global economic situations, but the current uncertainty persists despite this demand.
Yardi said Capgemini sees early demand and use cases for solutions like generative AI in content creation but believes it needs to mature further.
He said both the macro-economic situation and the geopolitical flux have added to the uncertainty among global technology clients.
“Historically, when there is a strong cost pressure, especially outsourcing and outsourcing to India see better outcomes. But the situation is that today people are still uncertain even while investing in cost savings projects. That’s where (there are) some of the challenges,” Yardi said.
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Capgemini’s revenue growth guidance of 4-7% – after growing at over 16% in 2022 – is based on the destinations over a high base effect as well as cautious client behaviour.In its fourth quarter earnings call, the company called out slowing demand for its cloud, data and artificial intelligence services. It has also seen an uptick in demand for offshoring delivery as European clients have struggled with economic constraints.
“We have to recognise that for the last 8-10 quarters Capgemini has grown in double digits. So, there is a base effect built into the guidance,” he added.
Most clients are equally impacted by the inflation, macroeconomics, and geopolitical scenario.
“So, our approach is to be conservative despite outperforming our own guidance in 2022,” Yardi said.
The company reported constant currency revenue growth of 16.6%, above the 2022 target range of 14-15%, which was revised upwards after announcing its half-yearly results.
He added that the company continues to see good demand across sectors, especially from industries like automotive.
On the demand for ChatGPT, Yardi believes the platform does a good job of creating content but has a long way to go in terms of applications.
“Different parts of it can complement our business in some ways. We realized it does a good job of coding and can be very useful in training talent. It can reduce the time to train talent by giving them a virtual assistant. We also see scope for creating media content,” he said.
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